S/R

[dbphoenix]

You've heard about the forest and the trees? By trying to analyze volume via 1m bars, you are definitely in the trees. Surrounded by them, in fact. This is not to say that it can't be done, nor that you can't do it. But you may be making it more difficult than is necessary.

Would you be interested in trying this again using 5m bars?

 

[sulong]

Quote from dbphoenix:

You've heard about the forest and the trees? By trying to analyze volume via 1m bars, you are definitely in the trees. Surrounded by them, in fact. This is not to say that it can't be done, nor that you can't do it. But you may be making it more difficult than is necessary.

Would you be interested in trying this again using 5m bars?

Yes I'll use whatever time interval that might help me get a grasp on what might be going on in the here and now.

One thing, I'm not sure if the type of information I'm recording, is the right kind of info, that will be or is, beneficial.
I think it is, at least in regard to light V on a pull back, after a heavy V directional move.


Are you referring to a "replay", using 5 min bars, or real time, or both?

 

[dbphoenix]

Quote from sulong:

Yes I'll use whatever time interval that might help me get a grasp on what might be going on in the here and now.

One thing, I'm not sure if the type of information I'm recording, is the right kind of info, that will be or is, beneficial.
I think it is, at least in regard to light V on a pull back, after a heavy V directional move.


Are you referring to a "replay", using 5 min bars, or real time, or both?

Only you can decide what's beneficial to you and what isn't as that won't be the same for everyone, which is why comments such as "trading off 1m charts is a waste of time" or "scalping is a waste of time" or "the ADX is a waste of time" and similar comments can be taken with a grain of salt. It's up to you to decide for yourself what's a waste of time or not, even if I tell you that something is a waste of time

I don't know that going through this exercise with a longer bar interval will open a window or not. It may not, though I don't think it will be a waste of time . The experience may trigger something later, like tomorrow, or next week, or next month. But I do know that you're going to continue to have trouble seeing what's in front of you until you back off a little and look at the forest, the "big picture", the "gestalt".

Perhaps you're working under what you think is a truism that there is one best opportunity for entry during the day and that, if you miss it, you're done. If that's what you're doing, you may be correct about the former. There's plenty of time to debate that. But there are nearly always multiple opportunities to enter trades during the day since there are nearly always multiple setups to take advantage of.

Therefore, don't be quite so jumpy about getting in there as early as possible and taking what is in any way acceptable. Let traders show their hands. That's part of what volume analysis is all about, since traders will indicate by their trades what they expect to see happen or what they want to happen or what they may even cause to happen.

As for this morning, did you feel that you were getting enough information about what traders were doing? Did you have a definite idea of what was being tested? Was whatever information you were getting good enough to persuade you to enter just minutes before an imporant report?

Look at the bar that accompanied the report. There's no follow-through, suggesting that the selling is over, at least for now. Is there enough here to give you the confidence to go long? How do you know price won't make another U-turn and continue to fall? What's being tested, if anything? Would you rather wait until you find out what happens at the test of the opening high? Will you go long if we make a new high?

Yes, it can be confusing, because you're not talking about just volume and the relationship between a given volume bar and a given price bar, but about your strategy, your tactics, the setups you look for, your risk tolerance, etc. And all of this is whizzing by while you're trying to evaluate everything and decide whether or not to make an entry and there's no time.

Which is why it pays to pick your spots well ahead of time, consider using a longer bar interval, and just wait to see what happens. If you know exactly what you're looking for, exactly where you expect to see it, and exactly what you plan to do about it if and when you see it, then you can be a spider and just wait for it. Otherwise, you are much more likely to become confused by all the twists and turns and end up doing the wrong thing at the wrong time, missing the real opportunity when it presents itself.

So scroll back to today's pre-open and go through it all again using a longer bar interval, bar by bar. Yes, you know what's going to happen, but that can't be helped. If you can't block that out, then choose some chart randomly from a month ago and go through the exercise that way. Then the next chart. Then the chart after that. You won't remember what happened on any given day a month ago (or two months ago), and though you won't get a sense of the pace of trading, you will at least be able to avoid "hindsight" to a large extent.

 

[sulong]

Starting with a daily chart look.
Going back to the Christmas holiday time for my longer term look.

1. coming out of 12/26, NQ made consecutive higher h/l on increasing volume, until we get to 1/13,
2. at which time NQ corrected down on fairly heavy volume, to its 10 ma line.

3. After a day of consolidation with relatively light volume on 1/14,
4.demand came into the market with the highest volume of the year.( on the 15th).

5. NQ made new hi's on th 16th and 20th on noticeably lighter volume.

6. For the next 4 days NQ experienced a back and forth action, with daily ranges expanding its 10ma ave.range, on relative heavy volume.At this point, 1516 seems to be holding as support.

7.On 1/28, broke through short term support of 1515.

8. Demand seems to come into the market on the 29th, with heaver volume, and price closing near it's open.

9. Price consolidates for a few days, before testing the 61 area, also filling the gap left back on 2/2 - 2/5.

10. After testing, and building on our S area for 3 days, we have a rebound, which takes us up to our S now turned to R at 1517, on declining V.
In Wyckoff lingo, this could be a "technical rally"

At this point we are in a trading range between 1518 and 1461, those two area's are important to see what kind of V comes in, and whether or not they hold,

 

[sulong]

60m chart - 10 day duration.

I'll begin with the NQ bottoming process on 2/4 - 2/6

1. the heaviest V of the day comes in the last 2 hours, which halts further down ward movement going in to the close.

2. 2/5 spent the day in consolidation, with lo V

3. had some early reports out on 2/6, which NQ reacted with a quick test of the lo and rebound, on very high V for that time of day.
( note; I haven't been keeping data for the pre market for very long, so I'm guessing at "normal V" during this time)

4. Nq broke out of it's 2 day range on somewhat heavy V, but still not as heavy as that on some of the prior down bars.
5. as price approaches the most recent hi point at 1510, V is declining.

6. At point 6 we see another BO of a 2 day range, on what is close to the BO V we seen on 2/6 at point 4.
there is fairly active V in the afternoon hours of the day, as nq test it's R line at 1515.

7. The next day, on 2/12, NQ tested it's R level, and failed, on obvious less V then the test the day before.V remains lo through the day as price eats in to the gains of the prior day.

8. 2/13 NQ rises at the open, but does so on noticeably lighter V,

9. At which point supply come in heavy and drives price down continually through out the morning session, the V is equal to that of the afternoon of 2/2.
V then fell off the rest of the day, while price stayed near the days lo. V ended up at being ave. for a days time.

 

[sulong]

NQ 5m 2/13

Dotted lines are floor pivots, solid lines are prior Hi's/Lo's.

1. The NQ's reaction to early reports seem insignificant to me as was V.

2. Price opened near the pivot,and rose to and poked through the top of the prior days closing range.

3. A pull back to the pivot with lower V, ( which looked to me at the time, a good place to go long)

4.price rose once again, and tagged R1, on rising V.

5. price then fell back to it's pivot, on declining V

6. price then poked through the pivot decisively, on a V spike.

7. price then found temporary support at yesterdays close, on diminished V.

8.price then plunged 10 pts on very heavy V, in the process poking through S1

9.Price continued down on heavy V, until it reached S2., at which point it found some support with less than the V on point 8.

10. price slowly recovers from its down move, and limps back to S1 on significantly lower V. The point at where price touches S1, we see the lowest V sense the open.

11. One more bout of selling appears, with heavy, but some what less V, where price finds its low of the day

12. Price staggers away from the battle field, on low, and slowly expanding V

 

[dbphoenix]

Quote from sulong:

Starting with a daily chart look.
Going back to the Christmas holiday time for my longer term look.

1. coming out of 12/26, NQ made consecutive higher h/l on increasing volume, until we get to 1/13,
2. at which time NQ corrected down on fairly heavy volume, to its 10 ma line.

You're using the wrong number of minutes on your daily chart. You should have five bars per week and none of those little "boops". Look at your on and off times on your chart settings and make sure you're counting all the minutes recorded each day and not pushing some off into the following day.

In any case, I wouldn't call the movement at "2" a correction, just a little pullback. Volume was fairly heavy, but you'd have to look at the intraday chart to know whether it represented demand or supply. The bar closed at a neutral point, halfway along its length.

3. After a day of consolidation with relatively light volume on 1/14,
4.demand came into the market with the highest volume of the year.( on the 15th).

Demand came into the market, which is why the volume is higher, but so did supply, which is why you ended up with a doji.

5. NQ made new hi's on th 16th and 20th on noticeably lighter volume.

And what does that lighter volume mean to you?

6. For the next 4 days NQ experienced a back and forth action, with daily ranges expanding its 10ma ave.range, on relative heavy volume.At this point, 1516 seems to be holding as support.

And what is the significance of the range expansion in terms of demand and supply and fair price?

7.On 1/28, broke through short term support of 1515.

8. Demand seems to come into the market on the 29th, with heaver volume, and price closing near it's open.

Correct. And why do suppose it found support at "8"?

9. Price consolidates for a few days, before testing the 61 area, also filling the gap left back on 2/2 - 2/5.

There may not be a gap. Again, you'll need to adjust your settings.

10. After testing, and building on our S area for 3 days, we have a rebound, which takes us up to our S now turned to R at 1517, on declining V.
In Wyckoff lingo, this could be a "technical rally"

I wouldn't call it a technical rally because there was no capitulation and no selling climax, just a bounce off support.

At this point we are in a trading range between 1518 and 1461, those two area's are important to see what kind of V comes in, and whether or not they hold,

I wouldn't call it a trading range yet as neither of these levels has been tested more than once. This may become clearer once you correct your settings.

More later.

 

[dbphoenix]

Quote from sulong:

60m chart - 10 day duration.

I'll begin with the NQ bottoming process on 2/4 - 2/6

1. the heaviest V of the day comes in the last 2 hours, which halts further down ward movement going in to the close.

2. 2/5 spent the day in consolidation, with lo V

3. had some early reports out on 2/6, which NQ reacted with a quick test of the lo and rebound, on very high V for that time of day.
( note; I haven't been keeping data for the pre market for very long, so I'm guessing at "normal V" during this time)

4. Nq broke out of it's 2 day range on somewhat heavy V, but still not as heavy as that on some of the prior down bars.
5. as price approaches the most recent hi point at 1510, V is declining.

As you note, heavy volume kills moves. An important point, worth remembering.

As to 4, it isn't crucial that volume equal or exceed that of previous down bars. Remember that that volume represents selling, and sellers generally aren't going to sell twice, i.e., many or most of them are done. Therefore, the amount of demand that it takes to drive price up is not as much as it might otherwise have been. What is more important is the effect of whatever demand there is on price, which is more than enough to drive it out of that range.

As to 5, the declining volume is actually a plus. It suggests that what buyers there are are willing to pay higher prices for what is available. It also suggests that most holders believe that prices aren't high enough. If price moved faster, or if volume were higher, prices would be less likely to hold. All of which is why volume is supposed to "dry up" with patterns like these. The relatively light pullback volume and the lack of follow-through in either price or volume on these pullbacks are also important clues to future action.

6. At point 6 we see another BO of a 2 day range, on what is close to the BO V we seen on 2/6 at point 4.
there is fairly active V in the afternoon hours of the day, as nq test it's R line at 1515.

7. The next day, on 2/12, NQ tested it's R level, and failed, on obvious less V then the test the day before.V remains lo through the day as price eats in to the gains of the prior day.

8. 2/13 NQ rises at the open, but does so on noticeably lighter V,

9. At which point supply come in heavy and drives price down continually through out the morning session, the V is equal to that of the afternoon of 2/2.
V then fell off the rest of the day, while price stayed near the days lo. V ended up at being ave. for a days time.

You seem to have this well down. Note again that big volume kills the move. Not much I can add to what you have here, at least for now.

More later.

 

[sulong]

You're using the wrong number of minutes on your daily chart. You should have five bars per week and none of those little "boops". Look at your on and off times on your chart settings and make sure you're counting all the minutes recorded each day and not pushing some off into the following day.



Thanks for the tip on displaying the correct data on my charts.
Last spring, I was trying to fix my data, and accidentally deleted all my saved NQ data.. Then I tried the same thing with ES, and got the same results.

This time it worked out, so, I'm making some progress.



As far as 2., my chart looks very different now, there is no poke through the ma.



And what does that lighter volume mean to you?



New high on less or lower volume = diminishing demand.

Opps, I just read your last post again, so I need to rethink the low/lighter volume.

And what is the significance of the range expansion in terms of demand and supply and fair price?

In this example, where price range is expanding, with no progress, it shows a disagreement between bulls and bears, and after one or the other gets exhausted, the winner determines fair price



Correct. And why do suppose it found support at "8"?


I don't really know, but my guess is the top of the gap left from 2/2 - 2/5. ( by "gap" I mean the current days open, higher than the prior days close, and price not retracing that open area. Although, maybe a true gap is where a price opens outside of the previous days "range"?)

This may become clearer once you correct your settings.


Ya, my charts look totally different now, I'll have to do this over.

PS. This is my first try on making parts of quotes bold, so, hopes it works.

 

[dbphoenix]

And what does that lighter volume mean to you?

New high on less or lower volume = diminishing demand.

Opps, I just read your last post again, so I need to rethink the low/lighter volume.

It can mean diminishing demand, but, strictly speaking, lighter volume simply means fewer shares are being traded. Thinking of it as "less demand" or "diminishing demand" can put you into the wrong mindset. If prices are rising, lighter volume simply means that fewer people are driving the price higher. What is equally important is that price has not reached a level where serious supply is coming in (which, if unmatched by demand, would drive the price lower). In other words, the effect of volume on price tells you more about demand and supply than does the amount of volume per se.

And why do suppose it found support at "8"?

I don't really know, but my guess is the top of the gap left from 2/2 - 2/5.

I'm referring to the bars you have labelled as "8". 1/29? So that would be before 2/2.